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| Chuvash Roads Modernization Project |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 25835 |
| Company name | State Unitary Enterprise "CHUVASHAVTODOR" |
| Country | Russian Federation |
| Sector | Construction and Real Estate |
| Environmental category | B |
| Department | Sub-National Finance |
| Status | Active |
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| Date SPI disclosed | February 26, 2007 |
| Projected board date | March 28, 2007 |
| Previous Events | Invested: September 13, 2007
Signed: June 18, 2007
Approved: May 31, 2007 |
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| View Environmental & Social Review Summary (ESRS), click here |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
| The Chuvash Republic is a regional government in the Russian Federation with the population of 1.3 million people. It is located 650 km east of Moscow on the Volga river. The Republic’s current economic and social priority is to improve the road network and expand road access, especially for rural communities. The purpose of the investment is to provide a local currency loan in the amount of RUR1.3 billion ($49 million) to help finance the first stage of the Republic’s capital investment program in road sector through Chuvashavtodor, state unitary enterprise owned by the Chuvash Republic. The program involves construction and upgrading of about 550 km of rural roads and the rehabilitation of priority sections of the major road network that are presently in poor condition. Road contracts under the program will be competitively bid. The loan will be fully guaranteed by the Chuvash Republic. This project will be the second IFC sub-national finance investment in the Chuvash Republic. |
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| Project sponsor and major shareholders of project company |
The Chuvash Republic is one of the 86 Federal subjects of the Russian Federation. Its Gross Regional Product (GRP) was RUR76.6 billion ($2.7 billion) in 2005, about 0.4% of the national GDP. Industry accounts for about 30% of the Republic’s GRP, and agriculture 12.5%. The Republic’s economy has experienced fairly rapid growth since 2001, and this trend is expected to be sustained in the next few years.
Its annual revenues in 2005 were RUR12 billion ($417 million). Total expenditures in 2005 were RUR12.3 billion ($427 million), including capital investments of RUR2.4 billion ($83 million). The Republic is rated by Moody’s Ba2 (international scale) and Aa2.ru (national scale). The project will be implemented by the Department of Automobile Roads of the Ministry of the Town Planning and Public Infrastructure Development of the Chuvash Republic. Chuvashavtodor, a road enterprise owned by the Chuvash Republic, will serve as a financing vehicle for the project. |
| Total project cost and amount and nature of IFC's investment |
| The proposed IFC investment is an A loan of RUR1.3 billion ($49 million) to help finance the first phase of the road investment program, which will cost RUR4.2 billion ($158 million) and be completed during 2007. The overall program, which is estimated to cost RUR6.6billion ($249 million), will be implemented over two years. |
| Location of project and description of site |
| The Regional Government is headquarted in the Republic’s capital of Cheboksary. Project investments are spread all over the Republic, which has an area of 18,300 sq. km. The rural roads will connect 54,000 people in 350 isolated communities. The rehabilitation works will target sections of the Republic’s 1,600 km major road network. |
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| Anticipated development impact of the project |
The project will provide reliable all-season access to over 350 rural communities and restore/conserve critical road network assets. This will promote economic growth and SME development particularly in the agriculture sector, improve access to employment opportunities and social services (education and health) and thereby help improve living conditions and reduce rural poverty. It will help reduce road transportation costs, improving the competitiveness of the Republic’s businesses. The project will also promote greater competition in the road construction sector encouraging new private sector investment in the construction industry.
Accompanying technical assistance will help introduce improved investment prioritization and more efficient maintenance practices to the road sector, with positive fiscal and service delivery impacts. |
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| IFC's expected development contribution |
| The proposed loan will provide the Republic access to long-term Ruble financing on reasonable terms, which may not be otherwise available. It will foster a more cost-effective approach to expansion of the rural road network, balanced by high priority investments in the rehabilitation and maintenance of the major road network, as well as help modernize the Republic’s road sector management. The project would help a reforming Republic show good progress in a sector that should play an essential role in job creation and infrastructure delivery and serve as a model for replication in other regions. |
| Environmental and social issues - Category B |
The project is a category B investment according to IFC’s Environmental and Social Review Procedure. A summary of IFC’s environmental and social review findings for the project including the rationale for the B categorization is publicly available in the Environmental and Social Review Summary (ESRS) disclosed through IFC’s external website (http://www.ifc.org/projects).
The Environmental and Social Action Plan (ESAP), which is attached to the ESRS, contains specific tasks that Chuvash Republic will undertake to mitigate perceived risks and impacts from the project, and to ensure compliance with IFC’s Performance Standards. |
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| For inquiries about the project, contact: |
Nikolai V. Smirnov, Minister of Finance
Ministry of Finance, Chuvash Republic
K. Marx Street 34, Cheboksary 42800
Chuvash Republic, Russian Federation
Telephone: (8352) 620015
E-mail: finance@cap.ru
Environmental documentation will be made available:
Non-technical summaries of Environmental Impact Assessments that have been prepared (or that will be prepared) for the road sub-projects (over 200) must be made available to the public by the local administrations of the districts impacted by the sub-projects, prior to their implementation and in accordance with Russian legislation. |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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